Vermilion Energy Inc reports 181% Net Income decline and 43.3 pp EBITDA Margin decline from 67.4% to 24.1%
29.02.2016 • About Vermilion Energy Inc (
$VET) • By InTwits
Vermilion Energy Inc reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Vermilion Energy Inc doesn't have a profitable business model yet: 2015 ROIC is -6.8%
- EBITDA Margin is quite volatile: 24.1% in 2015, 67.4% in 2014, 76.2% in 2013, 69.6% in 2012, 65.7% in 2011
- Vermilion Energy Inc has high CAPEX intensity: 5 year average CAPEX/Revenue was 55.3%. At the same time it's a lot of higher than industry average of 28.4%.
- CAPEX is quite volatile: 168 in FY2015, 122 in FY2014, 56.5 in FY2013, 45.2 in FY2012, 48.6 in FY2011
- The company has unprofitable business model: ROIC is at -6.8%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Vermilion Energy Inc ($VET) key annual financial indicators
| mln. CAD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 977 | 1,031 | 1,206 | 1,312 | 915 | -30.2% |
| Gross Profit | 789 | 828 | 982 | 1,037 | 647 | -37.6% |
| SG&A | 45 | 44 | 50 | 62 | 54 | -13.2% |
| EBITDA | 642 | 717 | 919 | 884 | 220 | -75.1% |
| Net Income | 143 | 191 | 328 | 269 | -217 | -180.7% |
Balance Sheet
|
|---|
| Cash | 235 | 102 | 390 | 120 | 42 | -65.4% |
| Short Term Debt | 0 | 0 | 0 | 0 | 225 | |
| Long Term Debt | 373 | 642 | 990 | 1,238 | 1,187 | -4.2% |
Cash flow
|
|---|
| Capex | 491 | 559 | 561 | 908 | 516 | -43.2% |
Ratios
|
|---|
| Revenue growth | 42.9% | 5.5% | 17.0% | 8.8% | -30.2% | |
| EBITDA growth | 61.5% | 11.7% | 28.1% | -3.8% | -75.1% | |
| Gross Margin | 80.8% | 80.4% | 81.4% | 79.1% | 70.8% | -8.3% |
| EBITDA Margin | 65.7% | 69.6% | 76.2% | 67.4% | 24.1% | -43.3% |
| Net Income Margin | 14.6% | 18.5% | 27.2% | 20.5% | -23.7% | -44.3% |
| SG&A, % of revenue | 4.6% | 4.2% | 4.1% | 4.7% | 5.9% | 1.1% |
| CAPEX, % of revenue | 50.2% | 54.2% | 46.5% | 69.3% | 56.4% | -12.9% |
| ROIC | 24.5% | 21.2% | 23.4% | 14.2% | -6.8% | -20.9% |
| ROE | 12.0% | 13.9% | 20.9% | 14.4% | -11.2% | -25.6% |
| Net Debt/EBITDA | 0.2x | 0.8x | 0.7x | 1.3x | 6.2x | 5.0x |
Revenue and profitability
Vermilion Energy Inc's Revenue dropped on 30.2% in 2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 43.3 pp from 67.4% to 24.1% in 2015.
Gross Margin decreased on 8.3 pp from 79.1% to 70.8% in 2015. SG&A as a % of Revenue increased slightly on 1.1 pp from 4.7% to 5.9% in 2015.
Net Income marign dropped on 44.3 pp from 20.5% to -23.7% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 the company had CAPEX/Revenue of 56.4%. CAPEX/Revenue increased on 2.2 pp from 54.2% in 2012 to 56.4% in 2015. It's average level of CAPEX/Revenue for the last three years was 57.4%.Battling declining revenue Vermilion Energy Inc made large investments to CAPEX (234% of EBITDA) but that didn't help at least in this year.
Return on investment
The company operates at negative ROIC (-6.77%) and ROE (-11.20%). ROIC dropped on 20.9 pp from 14.2% to -6.8% in 2015. ROE dropped on 25.6 pp from 14.4% to -11.2% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 6.2x and Debt / EBITDA is 6.4x. Net Debt / EBITDA surged on 5.0x from 1.3x to 6.2x in 2015. Debt jumped on 14.0% in 2015 while cash dropped on 65.4% in 2015.
Appendix 1: Peers in Energy
Below you can find Vermilion Energy Inc benchmarking vs. other companies in Energy industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Petro Rio SA ($PRJ) | -36.3% | -32.1% | -34.9% | 10,977.1% | |
| ONEnergy Inc ($OEG) | | | | 6,002.6% | |
| Sterling Resources Ltd ($SLG) | | -94.8% | 4,514.9% | 2,244.4% | |
| Ikkuma Resources Corp ($IKM) | 22.5% | 17.0% | -4.5% | 1,231.1% | |
| Spartan Energy Corp ($SPE) | -8.2% | 16.6% | 29.9% | 923.7% | |
| |
|---|
| Median (160 companies) | 37.9% | 10.4% | 16.4% | 18.5% | -24.0% |
|---|
| Vermilion Energy Inc ($VET) | | 5.5% | 17.0% | 8.8% | -30.2% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| TransAlta Renewables Inc ($RNW) | | | 94.4% | 94.5% | 94.5% |
| Advantage Oil & Gas Ltd ($AAV) | 70.5% | 62.0% | 84.5% | 92.5% | |
| Freehold Royalties Ltd ($FRU) | 91.7% | 90.4% | 89.0% | 90.2% | |
| MEG Energy Corp ($MEG) | 85.5% | 86.8% | 87.4% | 87.6% | 84.1% |
| NXT Energy Solutions Inc ($SFD) | -43.2% | 65.6% | 36.0% | 87.3% | |
| |
|---|
| Median (140 companies) | 33.3% | 29.3% | 31.5% | 29.6% | 30.5% |
|---|
| Vermilion Energy Inc ($VET) | 80.8% | 80.4% | 81.4% | 79.1% | 70.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Seven Generations Energy Ltd ($VII) | | 56.9% | 54.0% | 106.0% | |
| Tourmaline Oil Corp ($TOU) | 67.4% | 67.9% | 80.0% | 97.6% | |
| Bonavista Energy Corp ($BNP) | 63.8% | 64.6% | 62.6% | 91.6% | 54.5% |
| Bellatrix Exploration Ltd ($BXE) | 42.7% | 58.6% | 83.6% | 89.6% | |
| Advantage Oil & Gas Ltd ($AAV) | -4.0% | 5.2% | 66.1% | 87.8% | |
| |
|---|
| Median (159 companies) | 24.7% | 25.0% | 30.5% | 28.9% | 12.0% |
|---|
| Vermilion Energy Inc ($VET) | 65.7% | 69.6% | 76.2% | 67.4% | 24.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Oryx Petroleum Corp Ltd ($OXC) | | | | 1,997.8% | |
| Petroshale Inc ($PSH) | 30.6% | | 346.6% | 865.9% | |
| Toro Oil & Gas Ltd ($TOO) | 192.4% | 139.0% | 39.2% | 808.7% | |
| Athabasca Oil Corp ($ATH) | 176.2% | 2,426.4% | 596.6% | 504.7% | |
| BNK Petroleum Inc ($BKX) | 139.2% | 195.8% | 789.1% | 316.6% | |
| |
|---|
| Median (162 companies) | 42.0% | 47.3% | 39.1% | 47.1% | 22.2% |
|---|
| Vermilion Energy Inc ($VET) | 50.2% | 54.2% | 46.5% | 69.3% | 56.4% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Pason Systems Inc ($PSI) | 33.5% | 30.0% | 29.7% | 41.0% | 6.0% |
| Sea Dragon Energy Inc ($SDX) | -10.1% | 8.1% | 21.8% | 32.9% | |
| Raging River Exploration Inc ($RRX) | | | | 29.1% | |
| High Arctic Energy Services Inc ($HWO) | 27.0% | 31.4% | 26.3% | 24.9% | |
| Rooster Energy Ltd ($COQ) | | | | 22.9% | |
| |
|---|
| Median (165 companies) | 4.4% | 3.2% | 4.5% | 5.0% | -7.1% |
|---|
| Vermilion Energy Inc ($VET) | 24.5% | 21.2% | 23.4% | 14.2% | -6.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Veresen Inc ($VSN) | 22.3x | 16.2x | 14.7x | 30.3x | |
| Lightstream Resources Ltd ($LTS) | | 2.0x | | 27.8x | |
| Petroshale Inc ($PSH) | 0.1x | | | 21.7x | |
| Connacher Oil and Gas Ltd ($CLC) | 9.7x | 16.7x | 8.8x | 17.1x | |
| Pengrowth Energy Corp ($PGF) | 1.5x | 2.9x | 2.1x | 16.8x | |
| |
|---|
| Median (136 companies) | 1.2x | 1.6x | 1.5x | 1.4x | 3.5x |
|---|
| Vermilion Energy Inc ($VET) | 0.2x | 0.8x | 0.7x | 1.3x | 6.2x |
